Updates to Retirement Plans in 2025
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Updates to Retirement Plans in 2025
In November, the IRS announced some changes to contribution limits for 2025 for various retirement accounts. Here are the highlights of what you may need to know.
Some Employer Sponsored Plans increase limit
In 2024, the limit on 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan was $23,000. The government has upped that limit to $23,500 in 2025. The catch-up limit of $7,500 is unchanged meaning those 50 and up will be able to contribute $31,000 to their plans in 2025. For those aged 60-63 there is an additional catchup contribution that will be allowed as well. Additionally, the government increased the SIMPLE IRA limit from $16,000 to $16,500 in 2025.
IRA Contribution limits unchanged
The IRS increased IRA contribution limits in 2023 and 2024 from $6,000 to $6,500 and $7,000 this year, but the IRS announced that they will not be changing the limit in 2025. The contribution limit will remain $7,000 with a $1,000 catchup contribution for those over the age of 50. There were some slight changes to the income limit for IRA deductions as well. If you had previously been a high-earner unable to deduct contributions to a Traditional IRA, check with your advisor and see if you now qualify. Likewise, the IRS is increasing the phase out limit for Roth IRA contributions. If you were previously needing to do a backdoor Roth to make Roth IRA contributions, you may be able to make contributions directly to a Roth IRA with these changes.
Those are the two biggest updates the IRS had in regards to 2025 investment accounts. There were other changes (specifically to pension plans) and if you have specific questions please contact your financial advisor for more information.
We’re looking forward to a wonderful 2025 with our clients. May you all continue to have a Happy New Year!
Nathan Carroll
Registered Assistant
208-918-8655
nathan.carroll@christianwm.com
